Mohegan - Mitchell Etess told a radio talk show host it was the worst day of his career.

That day was Tuesday, when Etess, Mohegan Sun's president and chief executive officer, confirmed that the first mass layoffs in the casino's 14-year history were being carried out.

It was "gut-wrenching, difficult," he said later, "way worse" than Jan. 11, 2009, the day Mohegan Sun officials announced salary rollbacks and other cuts for nearly 10,000 employees.

"Once you do layoffs, people know there's a chance it could happen again," Etess said.

Financial analysts, in fact, believe Mohegan Sun may eventually have to downsize further, barring an unexpected turnaround in an economy recovering slowly from recession.

"This doesn't solve their problem," an analyst who tracks casino finances said of the Mohegan Sun reorganization in which 475 positions were eliminated, resulting in a net loss of 355 employees, or 4 percent of the casino's workforce.

"It does help right-size the cost structure of the property and improves their cash-flow profile," said the analyst, who asked not to be named. But, he added, the savings associated with the layoffs might not be enough to satisfy the lenders the casino will be approaching as it seeks to refinance portions of a debt load of more than $1.6 billion.

Etess, who would not say how much savings the layoffs were expected to produce, challenged the analyst's view.

"We believe that there will be no more layoffs," he said Friday, repeating an assertion he made earlier in the week. "We've adjusted our employee count to meet our business volumes, fully aware we have a full set of maturities coming up.

"It may be fair to say we needed to do these (layoffs), but it's not fair at all to say we need to do more."

The Mohegan Tribal Gaming Authority, which operates Mohegan Sun and Mohegan Sun at Pocono Downs in Wilkes-Barre, Pa., has a $675 million revolving bank loan due March 9, 2012, and $250 million in senior subordinated notes due April 1, 2012. Another $250 million in senior notes come due Feb. 15, 2013, and other loans mature in 2014 and 2015.

According to a presentation Leo Chupaska, the authority's chief financial officer, gave last week at a conference on tribal finances and posted on the authority's website, recent transactions have provided the authority "sufficient time to address nearer term maturities."

The presentation also notes that during the 12 months that ended June 30, Mohegan Sun's net revenues were down $98 million, or 7.8 percent, compared to the previous 12 months.

In a filing with the U.S. Securities and Exchange Commission, the authority estimates that severance packages for Mohegan Sun's laid-off workers will total between $8 million and $10 million, which will be incurred in the quarter ending Sept. 30.

At the press briefing at which the layoffs were announced, Bruce "Two Dogs" Bozsum, vice chairman of the Mohegan Tribal Council, which doubles as the authority's management board, said no decisions had been made about cuts in tribal government or per-capita distributions to tribal members. Analysts said those are areas that might have to be reduced.

Lowered ratings

The recession and the slow recovery from it have had a significant impact on gaming operators, both commercial and tribal. In a report issued Wednesday, Standard & Poor's, the credit-rating agency, said that since 2008, its rating service has lowered ratings on 23 gaming operators to "D," the lowest-possible level. Three of the operators were tribal, including the Mashantucket Pequot Tribe, which owns Foxwoods Resort Casino and MGM Grand at Foxwoods.

Standard & Poor's lowered its issuer credit rating on the tribe to "D" on Nov. 16, 2009, after the Mashantuckets defaulted on a bond interest payment due on that date. The tribe has since defaulted on other interest payments as well as a $700 million revolving bank loan that matured in July.

Standard & Poor's announced last month that it would no longer rate the Mashantuckets. Moody's Investors Service, another credit-rating agency, also has stopped rating the tribe, which is seeking to restructure a total of more than $2 billion in debt.

Standard & Poor's rating on the Mohegan Tribal Gaming Authority is "B," with a "negative" outlook. In its report, the agency notes that many gaming tribes face debt maturities in the next few years:

"We believe that the level of success that tribes achieve in addressing these maturities will depend upon investors' willingness to differentiate among tribes and gain comfort around a tribe's willingness to meet debt service requirements, potentially at the expense of tribal distributions, if operations weaken."